5 Important Reasons for the Growth of Solar Industry

Today, there are more people employed in the solar industry as compared to the gas fields and oil rigs. In fact, with a 20% annual increase, the solar industry added more than 35,000 jobs this year - which increases the employees working in the solar energy industry in the United States to 209,000. The industry employs solar panel installers, engineers, sales personnel, designers, and a host of other categories. The industry is almost three times the size of the coal mining workforce and significantly outsizes the gas and oil industries.

Experts wonder what factors might have contributed to the steady five-year growth period of the solar industry. In fact, things like environmental sustainability and improved consumer awareness have played a significant role in the growth process. But, there are many other factors that have contributed to this growth. Here are five important reasons for the solar industry's recent growth.

Tax Credits

The U.S. government implemented a solar investment tax credit (ITC) program to promote the growth of the industry in the country. Anyone who invests or develops solar energy could apply for this tax credit. In fact, the residential and commercial ITC program was initiated in 2006 with the goal of implementing it for a few years. But the U.S. Congress voted to extend the program until 2023 in December 2015.

The ITC has a compound annual growth rate of almost 76%. In fact, the program helped annual solar installation grow by over 1,600% during the last ten years. With the extension of the program, solar energy prices are expected to further decline in the coming years. The solar installation is expected to quadruple by the year of 2020. The workforce is also expected to double during the same period.

In fact, the ITC program is considered one of the most important contributors to the growing success of the solar industry. The long-term and stable federal tax incentive will help spur economic growth while reducing the energy prices and creating thousands of jobs in the country.

Climate Change Agreement In Paris

The Paris Climate Change Agreement has designed a global plan to decrease harmful global warming. This is another important contributor to the popularity of the solar industry. The Paris agreement initiated in December 2015 - which was agreed upon by negotiators from more than 195 countries around the world. It is aimed at limiting global warming by reducing carbon emissions worldwide.

This agreement will address issues such as food security, deforestation, poverty, and more. The agreement issued guidelines for developed countries to follow to reduce carbon emissions. These guidelines state that developed countries should help developing countries worldwide with scaled-up, long-term technology and capacity building. The U.S. federal government has been promoting residential and commercial customers to use solar power as a result of the Paris Agreement.

Low-Cost Equipment

The cost of solar energy equipment has reached an all-time low right now. The prices have dropped almost 70% since 2010. This is perhaps the leading reason for the growth of the solar industry. The average home consumes electricity at a rate of 1 kW per hour. The average home uses 730 hours in each month. Hence, the average price of a kWh of solar electricity is around $0.10, and the average monthly bill is around $73.

The installation costs have also dropped significantly during this period. Prices that cost between $7-9 per watt have dropped to $3 per watt. Hence, the average system costs around $25,000-35,000. Even though the upfront costs of installing solar panels may seem high on paper, many utility services offer incentives. On the other hand, many companies subsidize as much as 50% of the solar system costs. In fact, every system has four equipment components such as the controller, solar panels, inverter, and batteries. With the latest technological advances, these components are developed in a more efficient and affordable way today. In fact, the declining cost is another reason for more and more homes and businesses to switch to solar power.

Cultural and Marketing Demand

The rising popularity has helped the growth of the solar industry. Solar companies are conducting an extensive advertising campaign to popularize their products among the people. Many people see solar energy as a status symbol - which attracts more people to the industry. As many businesses realize the significance of reducing the carbon footprint, solar has come forward as the most efficient and affordable option.

Battery Storage

Battery storage has made a significant difference in the popularity of solar energy systems. The modern battery uses saltwater as the only electrolyte. On the other hand, the old lead-plate batteries were loaded with sulphuric acid that is harmful to the environment. They are also more expensive to manufacture. The modern lithium-ion battery eliminates the risk of fire hazards and thermal issues.

In fact, the cheap gas and oil prices are making it difficult to convince the consumer to shift to solar energy. But solar energy is here to stay and will continue to grow in popularity in the coming years.